Board to discuss fully funding pension

By MATTHEW BEATON / The News Herald

Published: Saturday, March 23, 2013 at 06:37 PM.

But the commission isn’t sold. At itsMarch 5 meeting, members made a formal request that the foundation fully fund the pension. The commission had just learned the pension was short about $15.4 million — the last time it was formally reviewed.

Lewis, Longman & Walker, a law firm the county hired, released its findings, which said the most recent actuarial report was done Jan. 1, 2012 and showed the pension “had assets of $84.8 million (actuarial value) and actuarial accrued liabilities of $100.2 million.”

That gap worries the commission, particularly because the pension’s only source of revenue is investments, which include stocks and bonds — less safe than cash investments like certificates of deposit.

Additionally, the foundation could fully fund the pension. It already has invested an extra $33.4 million for charity grants to health-care organizations in the area.

Commissioner Mike Thomas said pension funds and retirement plans are susceptible to stock market fluctuations or changes in the overall economy.

“I was concerned with this one already starting out not being fully funded. If they have stock (market) problems later on, it could create a problem, and I just wanted to make sure it was just as secure as it could be,” he said.

Thomas said he didn’t think the county would be financially responsible to cover the pension if it runs out of money, but he said the county is “morally” responsible to keep it safe. So he wants it fully funded — now.

PANAMA CITY— The Bay County Commission doesn’t want a local hospital’s pension to go up in smoke, so it’s requesting it be fully funded, immediately.

But the board charged with safeguarding the fund says those fears are unfounded and the pension is safe and secure.

After Bay Medical Center went private last year — becoming Bay Medical Center Sacred Heart Health System — its board of trustees — now called the Bay Health Foundation — assumed responsibility for the old hospital pension.

But the County Commission is concerned the pension will run out of money, and the county will be on the hook to pay for it and may need to raise taxes to do so.

But Andy Stein, who chairs the foundation’s Pension Committee, says there’s no reason to worry. He’ll address these concerns at Monday’s foundation meeting, along with the consulting firm that helps manage the fund, but he said it’s “very safe.”

“There is absolutely no validity in the claim or the requirement or the concern expressed by the County Commission about the pension fund. … To alarm people in any way shape or form needlessly causes me a great deal of concern. I think they’ve made a mistake by creating this as an issue,” he said.

But the commission isn’t sold. At itsMarch 5 meeting, members made a formal request that the foundation fully fund the pension. The commission had just learned the pension was short about $15.4 million — the last time it was formally reviewed.

Lewis, Longman & Walker, a law firm the county hired, released its findings, which said the most recent actuarial report was done Jan. 1, 2012 and showed the pension “had assets of $84.8 million (actuarial value) and actuarial accrued liabilities of $100.2 million.”

That gap worries the commission, particularly because the pension’s only source of revenue is investments, which include stocks and bonds — less safe than cash investments like certificates of deposit.

Additionally, the foundation could fully fund the pension. It already has invested an extra $33.4 million for charity grants to health-care organizations in the area.

Commissioner Mike Thomas said pension funds and retirement plans are susceptible to stock market fluctuations or changes in the overall economy.

“I was concerned with this one already starting out not being fully funded. If they have stock (market) problems later on, it could create a problem, and I just wanted to make sure it was just as secure as it could be,” he said.

Thomas said he didn’t think the county would be financially responsible to cover the pension if it runs out of money, but he said the county is “morally” responsible to keep it safe. So he wants it fully funded — now.

“I’d just like to make sure it’s taken care of. … I don’t want the county to be responsible for something and people in the public not thinking we’re doing all we can to watch it,” he said.

But Stein said it’s “irresponsible” to fully fund the pension because, once transferred, the money is locked into the fund until the last person receiving benefits dies. He said that could be 50 years from now.

Stein said if the foundation put $15 million in the fund now, but ultimately only needs $5 million, then $10 million has been tied up unnecessarily for decades.

The foundation has also taken special precautions to make sure the pension is protected. It’s earmarked an extra $20 million on its balance sheet for the pension, in case its investments go south, Stein said.

“I can assure you that if it ever came to the point where it was a question of funding the pension plan or providing grants for the community, that we’d fund the pension plan, which is the paramount concern,” he said.

He added, “I can’t stress enough this is such a well-funded, conservatively run pension plan.”

The County Commission also wants a voting seat on the nine-member foundation board, so it has a front-row seat to monitor the pension. The commission has repeatedly made that known and requested its appointee, Chairman Don Connor, vacate his seat to let one of the commissioners fill it. The request has been a source of acrimony between the boards and right now it is holding up an appointee to the foundation.

But Connor’s not leaving. Asked if he’d had a change of heart since the commission asked he leave, he said, “No, not hardly.”

“Why would I resign when I’ve got a whole board that has begged me to stay in this position? They just re-elected me in December for a second term as chairman,” he said.

The foundation meets at 9 a.m. Monday at Bay Med inside the Walsingham Community Board Room.

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